External debt, liabilities hit historic high of $88.9 billion

The country's external debt and liabilities continued to grow reaching historic level of $88.9 billion at the end of first half (July-Dec) of this fiscal year (FY18), mainly due to fresh borrowing from multilateral and bilateral sources on account of public debt. Economists said it appears that the federal government has borrowed enough in the preceding quarter to make the external debt payments and build the depleting foreign exchange reserves.
"The major surge has been arrived from public external debt and accordingly, the country's overall external debt and liabilities have reached at new historic level. The federal government borrowed some $2.5 billion through the auction for Sukuk and Eurobond in the international market in November 2017," they added. However, they said that fresh external borrowing and other foreign inflows were unable to finance the higher current account gap and hence compelled the federal government to utilize foreign exchange reserves for external debt servicing of which forex reserves have reached below $19 billion in the first week of February.
According to State Bank of Pakistan (SBP), the country's external debt and liabilities (stocks) posted an increase of 7 percent during July-December of FY18. Pakistan's total external debt and liabilities rose to $88.89 billion mark as on December 31, 2017 compared to $83.092 billion on June 30, 2017, depicting an increase of $5.799 billion during the first half of FY18.
However, as percent of GDP, total external debt and liabilities are almost flat at 27.4 percent at the end of first half of this fiscal year. During the period under review, the official foreign exchange reserve declined to $14.329 billion down from $16.243 billion, a decline of some $2 billion.
The total stocks of debt and liabilities comprise Paris Club, Euro Sukuk global Bond, IMF loan, foreign exchange liabilities, Public Sector Enterprises (PSE) guaranteed debt and non-guaranteed debt, bank borrowing, non-residential deposits, private sector guaranteed/non-guaranteed debt and foreign exchange liabilities and debt liabilities to direct investors.
The detailed analysis revealed that public external debt has highest share of 63 percent in the country's total external debt and liabilities. Public external debt posted an increase of 6.6 percent or $4.408 billion in the first half of this fiscal year. Out of total external debt and liabilities, external public debt stood at $70.511 billion in December 2017 compared to $66.103 billion at the end of June 2017.
During the period under review, among public debt, long-term debt portfolio increased from $55.547 billion to $59.445billion. The IMF debt surged by $147 million to reach $6.256 billion. In addition, PSEs debt went up by $237 million to $2.943 billion in December 2017.
With an increase of 4 percent or $184 million, bank borrowing reached $4.703 billion at the end of December 2017 compared to $4.519 billion in June 2017. Private sector debt also showed an upward trend surging by 11 percent during the first half of this fiscal year. Private sector debt stood at $7.236 billion at the end of December 2017, up from $6.505 billion in June 2017. Similarly, during the period under review, debt liabilities to direct investors moved up by $244 million to $3.498 billion at the end of first half of this fiscal year.